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The
Session's Over!
A Brief Recap of the 2008 Florida
Legislative Session
The 2008 session of the Florida Legislature is now officially over,
one for the history books.
The
2008 Florida Legislature completed its regular session on
Friday, May 2. Also, the constitutionally mandated
Taxation & Budget Reform Commission (TBRC), which meets
only once every twenty years, completed its work the week
before and officially ends its unique ability to propose
constitutional amendments for taxation and budgetary
processes for the November 2008 elections today.
Only
the Governor’s review of legislative bills, including the
FY2008-09 Appropriation Bills, is left undone as of this
writing. So, this issue of the Center’s Newsletter will
focus on a few areas of TBRC and Legislative activity during
these past few months that are of special interest to our
constituency and form an integral part of the Center’s
mission.
Prior
newsletters have highlighted areas of concern, specifically
focusing on areas of revenue concern.
High
on the Center's list of projects and concerns during the
past session were:
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Stopping a proposed
TABOR constitutional amendment by the Speaker of the
House and brought before the
Taxation and Budget Review Commission. TABOR
stands for Taxpayer Bill of Rights, a proposal (or
better stated, a series of proposals) named after a
problematic constitutional amendment enacted in Colorado
more than a decade ago and, in 2005, suspended for five
years by the voters of that state. We galvanized and
led
a successful coalition effort to stop the proposal at
the Commission and also in the Senate in the waning
days of the Session.
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Stopping the immediate reduction of corporate income tax
revenues over the next two fiscal years with an
estimated loss of $222.8-million in state revenue
($146.8-million in FY 08-09 alone) that would be caused
by the federal economic stimulus package due to
Florida's tax code being linked, or "coupled," to the
federal tax code. HB
5065 was passed on May 1 by both houses and “decouples”
the Florida tax from the federal for this purpose;
thereby, saving an estimated $146.8-million in FY 08-09
and $76-million in FY09-10 revenues. It also
changes the filing date for mid-year tax payments to
June 30, 2009, instead of allowing payments on July 1,
2009; thereby, increasing the revenue estimate by a
one-time $93.8-million.
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Supporting the
introduction in the regular session of the Florida
Legislature of
House Bill 1237 (Gelber)
and
Senate Bill 2766 (Deutch),
bills are designed to begin reducing Florida's
"giveaways" in its
corporate income tax by adopting the concept of Combined
Reporting, already in use in almost half of the states.
Closing such “giveaways” in the state corporate income
tax would produce an estimated $364-million annually.
HB1237 was reported unfavorably early in the session by
the House Government Efficiency & Accountability Council
along a party line vote, 6(D)-10(R), in the House of
Representatives.
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Supporting the introduction in the regular session of
the Florida Legislature,
Senate Bill 2342 (Deutch)
and
House Bill 1209 (Fitzgerald).
The bills were designed to provide Florida a "circuit
breaker" option targeting the tax burden of lower- and
middle-income working individuals and families by
ensuring that property taxes paid by either renters or
homeowners does not exceed a reasonable portion of their
income. The bills were geared to provide much-needed
tax relief to renters or to new homeowners who were
either forgotten or given only token relief by the
massive tax breaks given in 2007.
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Launching the Center's newsletter, which has grown at an
unprecedented rate. The Center intends to continue
informing interested Floridians -- including advocates,
legislators and the general public -- that the goal
isn’t to fight over the existing pie (the amount of
money currently being collected by the state to carry on
its responsibilities toward its citizens) but to seek
alternative sources of revenue that will address the
structural deficits at the State level and enable the
State to meet its financial responsibilities fully and
enable local governments to focus on better serving
their citizens.
By
now, those among you who have been following the session
know our state’s legislative leaders and the Governor once
again resisted efforts to make Florida’s tax system more
responsive and fair.
Revenue projections made in March, at the beginning of the
regular session, continued the trend of reducing the revenue
estimates for our General Revenue Fund for this fiscal year
and the next two. In fact, revenues during this period were
projected to be below the revenues that the state received
during FY 2005-06. The General Revenue Outlook statement
made after the March estimating conference and the early
legislative action to make cuts and other adjustments for
this fiscal year showed that the $4.990-billion surplus in
that fund at the end of FY2006-07 will be reduced to
$322-million by fiscal year end --
Office of Economic & Demographic Research’s Financial
Outlook Statement.
Even
more troubling, as the April Financial Outlook Statement
projected a $322.5-million unallocated General Revenue fund
“reserve” at the end of this fiscal year, revenues for March
and April of this year are now $181.5-million below
the March consensus estimate, which means any balance at the
end of the fiscal year is now, at best, doubtful. This
lackluster picture left only the official “rainy day” fund
(the Constitutional “Budget Stabilization” Fund) of
$1.354-billion and any excess trust fund reserves available
for support of next year’s funding decisions in addition to
the “recurring revenues” coming during the year from taxes,
licenses and fees.
The
2008 General Appropriation Act appropriated $66.2-billion in
total funds, of which $25.6-billion (more than $1-billion
over the estimated collections) were General Revenues of the
state. The rest of the total funds is composed of federal
funds and revenues directly dedicated to very specific
activities and held in various trust funds.
As
stated earlier, our state’s leaders resisted any
effort to make the state tax system more responsive and fair
in order to make the state better able to meet its
commitments for funding critical services during this time
of recession. Instead, and the Center believes unwisely,
they relied only on estimated receipts from the current
revenue base and used some available “excess” in selected
trust fund “reserves” to provide needed revenues to fund
their Appropriations for the upcoming fiscal year.
The
new
Financial Outlook Statement provides a good review of
the results of their choice and provides insight into the
problems that will face Floridians over the upcoming year
and will weigh heavily on plans for the 2009 and 2010
sessions of the Legislature.
The
much-publicized expenditure “cuts” and program reductions
will not only continue but could possibly be expanded if the
state doesn’t get its fiscal house in order. Local
governments will again be given direct mandates to fund what
have traditionally (and correctly, the Center believes)
state responsibilities or, even worse, to stem the many
“holes” created by the state’s abject refusal to take
appropriate action to ensure that the state’s economic
future is sound by investing in both our physical and human
infrastructure, including an educated and healthy workforce,
and providing for the environment and public safety.
The
state also opted out of investing in programs that would
have a long term positive economic impact -- such as
corrections, education, healthy children, etc. -- and
instead elected to build new prisons, utilize the county
jails and public safety system to deal with persons with
mental disabilities, instead of making sure every child
receives decent health care and educational opportunities.
Chalk
most of this to a failure to address the revenue side of the
state fiscal and economic policy.
As the
Center has consistently reported, state revenues have
consistently failed to keep pace with the general economy of
the state. Currently the state is projected to
collect direct revenues $12.7-billion this fiscal year
(almost $15-billion by fiscal year 2011-12) below the
constitutional cap put in place in 1994 based on growth in
state personal income which is a good approximation
of the state’s economic base --
Office of Economic & Demographic Research’s Forecast --
based on spring 2008 Consensus Estimating conferences.
Clearly, the state has failed to keep pace with the growth
in its economy and has created structural deficits in its
ability to pay for key state services.
This
is a result not only of the current economic downturn in our
state’s economy, accompanied by a general downturn in the
country’s economy, but on
deliberate actions to repeal or reduce taxes taken by our
state’s leadership during the last decade. Many of these
actions went unnoticed due to the state’s “construction
bubble” which followed the 2004 Hurricane Season, as well as
by the state’s absolute reliance on the local property taxes
over the past five years to fund the basic K-12 education
program, the keystone of our state’s educational system.
Taken
together, these actions consisted of the substantial tax
cuts for corporate and wealthy interests accompanied by the
failure to close corporate income tax loopholes – some of
the most egregious are detailed here –
Exemptions, Deductions and Credits from the Sales and Use
Tax. It is most telling that in this time of hardship,
massive tax cuts continue to reward those interests, while
the popular tax “holidays” for consumers (the lower and
moderate-middle income working families and retirees) for
“back to school” and “hurricane season preparation” were not
granted this year.
Two small, but indicative, stories
The
House adopted by a voice vote on the floor an amendment to
HB5001 (the General Appropriations Act) proposed by
Representative Ron Saunders (D) to defer payments to sports
franchises as cash support provided by the state. The
budget also called for continuing the restrictions on
support for families in crisis and need which has resulted
in reducing cash assistance payments (welfare) from a
caseload of 234,481 (633,141 persons or $ 780.7 million) in
FY1995-96 to 47,917 (77,180 persons or $157.3 million) this
fiscal year. The average monthly grant per person was
$95.27 (totaling a cost of $780.7 million in FY95-96) and
$146.10 (totaling $157.3 million in this fiscal year).
Next year’s projected average monthly payment per person is
set at $142.93. Cash support payments now account for less
than 1% of the federal-state Medicaid program. All the
costs, of course, are borne in part by federal monies and
are not borne solely by General Revenue. In fact, General
Revenue generally bears approximately 43% of the costs --
see
Temporary Assistance for Needy Families (TANF) Background
Information, thanks to
Don Winstead,
Deputy Secretary,
Florida Department of Children and Families.
The
Sports Subsidies proposed to be deferred generally
amount to $166,667 per month (all from General Revenue) and
listed in a chart edited to include to total value of the
given teams and the amount of your hard-earned dollars the
state sees fit to send their way every year are
highlighted here. These are in addition to the
significant local subsidies given for stadia and other state
and local tax expenditures.
In the
final conference report, the House position was rejected and
these cash payments remain in effect through next fiscal
year.
The
other story dealt with tax expenditures rather than direct
subsidies in the General Appropriation Act. One of the few
state tax bills to be adopted during this session was HB 653
that increased the limit of corporate income tax credits for
private school vouchers by $30 million annually resulting in
increases to tax expenditures for private school vouchers
from $88 million at present to $118 million. It also
increased the amount paid per student voucher annually from
$3750 to $3950 and granted a “bonus” of $200 for any student
taking the FCAT exam. Proponents argued that the increase
would pay for an additional 6,000 students to be removed
from public schools and reduce the state’s FEFP program
payments by more than the $30 million expenditure; however,
if you take the increase for current recipients and the $200
bonus for all recipients, the $30 million over the next year
will use almost $8 million to meet current recipient
requirements. Opponents point out that it reduces the
school population unevenly and doesn’t provide any immediate
reduction in public school facility and operating costs.
The Taxation and
Budget Reform Commission (TBRC)
Actions at a Glance
The
Florida Taxation and Budget Reform Commission (TBRC)
approved seven constitutional amendments for placement on
the Nov. 4 ballot. These seven amendments make significant
changes to the state’s fiscal policy and will have
tremendous ramifications over the upcoming years. The
discussion over both these amendments will finally allow the
voters to confront directly, and force candidates to address
squarely, the state’s role in not only financing state
services, particularly public school education, but its role
in providing assistance to private and religious schools.
It also continues the state actively reducing the local
property tax for various purposes and gives state community
colleges (the primary source of remedial education and entry
level higher education) authority to levy an additional
local option sales tax.
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TBRC Proposals |
Brief Explanation |
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RLE
Replacement/Sales Tax |
A
state-required local school tax would be repealed,
lowering overall property tax bills by 25 percent.
The Legislature would be required to make up the
lost school money through methods that could include
raising the sales tax 1 percentage point, repealing
sales tax exemptions, other revenue sources and
cutting other spending. The proposal also would give
properties that do not qualify for a homestead
exemption available only for primary homes a 5
percent cap on annual assessment increases.
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Property tax/Storm Hardening or Renewable Energy
Devices |
Owners of homes and other residential property would
get a small property tax reduction for energy
efficiency and wind storm protection improvements.
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Property tax/Working Waterfront Assessments
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Marinas, commercial fishing facilities and other
''working waterfront'' businesses would get a
property tax break by being assessed according to
their current use rather than their ''highest and
best,'' or potential use.
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Property tax/ Exemption for Permanent Conservation
Use & Classification of Land for Conservation
Purposes
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Land held in perpetuity for conservation purposes
would be exempt from property tax and other
conservation lands would be taxed based on their
current use rather than their ''highest and best,''
or potential use.
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Blaine Amendment |
A
constitutional ban on direct and indirect state
financial aid to churches and religious
organizations would be repealed.
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Public Schools/Providing Public Funding for All
Providers and Requiring 65% for Classroom
Instruction.
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A
Florida Supreme Court opinion striking down a
program that sent students from failing public
schools to private schools at taxpayer expense would
be set aside. Other voucher programs would be
protected against similar legal challenges, and
school districts would be required to spend 65
percent of their budgets in the classroom.
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Local Option Tax for Community Colleges |
Local option sales taxes could be imposed to support
community colleges if approved by voters in each
county served by a college.
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NOTE:
Taxation & Budget Reform Commission Constitutional Proposals
(in Acrobat Reader format).
CP0002 - Final
(Adobe PDF - 32kb)
CP0004 - Final
(Adobe PDF - 32kb)
CP0006, 0008, 0034 - Final
(Adobe PDF - 24kb)
CP0015, 0016 - Final
(Adobe PDF - 28kb)
CP0020 - Final
(Adobe PDF - 20kb)
CP0026, 0040 - Final
(Adobe PDF - 16kb)
CP0035 - Final
(Adobe PDF - 16kb)
Transmittal Letter to Secretary of State
(Adobe PDF - 100kb)
For a copy of this article in Acrobat Reader
Format,
click here.
Finding
Funds to Help Balance the Budget:
Getting Our Heads Out of the Sand
As advocates begin the process of
discussing and disseminating their
budget requests and priorities for the next
legislative session, please take note of the budgets
YOUR Florida Legislature is NOT cutting -- see
below.
This year, for the first time (in most cases),
some enlightened legislators
actually began to address the money that
would be available if the Legislature
decides to seriously start closing loopholes and
curtailing subsidies.
It is estimated that
a serious effort in that regard could
generate revenues in excess of $400
million.
Click on the links below for a better picture. Then
feel free to share this information with your legislators,
families and friends and everyone in your mailing lists.
All of the documents are in Acrobat Reader Format (.PDF).
Facing Deficits, Many States Are Imposing Cuts That Hurt
Vulnerable Residents
Budget Cuts or Tax Increases at the State Level: Which is
Preferable During an Economic Downturn?
Partial Loopholes List
Passive Investment Companies (PICs) Subsidiaries
Sports Subsidies
Thoughtful Analysis...Civic Engagement...Alternative
Approaches...Responsible Policy
The Florida Center for Fiscal and Economic Policy (FCFEP) is
an independent, nonprofit, non-partisan
organization engaged in research and education on state
fiscal and economic matters with particular attention to
their impact on low and moderate/middle income Floridians
and local small businesses owned by, and employing,
Floridians.
The Center provides reliable and timely analyses of
Florida’s budget and tax policies and promotes greater state
government fiscal accountability, improved services and an
enhanced quality of life for all Floridians. FCFEP’s
unique resources and capabilities gives it the ability to
assist organizations, program advocates, policy makers and
the public with accurate information on important topics in
a way that both budget experts and average citizens can
understand.
The FCFEP also works closely with advocates for at-risk
populations and experts on fiscal and financial matters in
analyzing state budget constraints and opportunities.
Through partnerships with grassroots organizations and
mutual collaborations, FCFEP serves partner organizations by
unraveling the maze of state budget and tax data to better
assist them in the pursuit of their policy objectives.
The Center is
currently conducting statewide networking activities among
advocacy and analytical groups as it expands its reach
across Florida. Initial funding support has come from the
Stoneman Family Fund, Annie E. Casey and W.K. Kellogg
Foundations.
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